Auto Finance and U.S. Economy Look Good for 2016, Economist Says

The 2016 forecast is set for smooth sailing for the U.S. economy in general and for auto finance in particular, said Emily Kolinski Morris, Ford Motor Co. chief economist, in a conference call on Tuesday.

Many of the “favorable factors” that produced record sales in 2015 — such as low fuel prices, a rebounding labor market, improved housing starts, and high consumer confidence — will remain in place this year, she said.

Interest rate hikes shouldn’t hurt auto sales significantly this year, the economist said. “We think the path of rate increases, based on guidance we’ve gotten from the Federal Reserve and what we hear in the industry, is going to be very gradual. Any headwind is going to be very moderate, not any kind of impediment until much later this year or maybe 2017.”

She said customer demand doesn’t necessarily move in lockstep with interest rates, since customers can opt for a less expensive car or switch to a longer term to keep monthly payments low.

“While every customer is different, there are certainly adjustments they can make,” she said. “It [demand] is not based just on the base interest rate.”